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Strategic outsourcing: play to your strengths

Tony Hague, managing director of PP Electrical Systems, examines the benefits of strategic outsourcing for Original Equipment Manufacturers (OEMs).

The ‘make versus buy’ decision can often be a complex and indeed an emotional one for a manufacturing business.

Historically, many UK companies have had a large degree of vertical integration and enjoyed the perceived benefits of in-house capability, deeming it more flexible, less risky and more cost effective than ‘paying someone else’ to do what they believed they could do better.

However, this attitude has changed significantly over the years, with manufacturers realising that they cannot be ‘masters’ of all disciplines; indeed such levels of high vertical integration and the associated overheads became ‘crippling’ and some manufacturers slow to change, rapidly became uncompetitive, particularly in the face of a changing and global market.

Now, where their factories once stood, we have another supermarket!

There is now a major shift towards OEMs considering exactly what is their ‘core competence’, in which areas should they invest and which processes add true value?

No-one would suggest that strategic outsourcing is a ‘silver bullet’ for increasing profitability for a business, but, used correctly, it can have a significant impact.

PP Electrical Systems works with many of the world’s leading machinery builders in a range of industry sectors, including machine tool; food processing; packaging; scientific equipment, and printing.

Our customers have taken the decision to outsource the electrical and often mechanical processes associated with the control and automation elements of their machinery, allowing them to focus and invest in other areas of design and production that is critical to their success.

 

Benefits of strategic outsourcing are many, but the common benefits that can be realised are:

We constantly hear on the news that the UK has problems with poor productivity. Strategic outsourcing is without doubt a method that, when utilised correctly, can significantly improve the productivity (£ sales per capita) of an organisation.

So having spoken about the potential benefits of outsourcing, it would be wrong to ignore the potential risks.

Assuming the manufacturer in question has correctly identified the areas suitable for outsourcing, the single biggest threat is selecting the wrong partner.

Sometimes the appeal of ‘lowest cost’ is strong, but this can be a huge error if other considerations are ignored, such as:

PP Electrical Systems, as an acknowledged world leader of control and automation solutions, provides strategic outsourcing to many of the leading machinery builders in the UK, Europe, Asia and the US.

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At PP C&A, we never assume that a solution for one customer will work for another, because every customer is unique. That is why we will never try to simply sell you an ‘off the shelf solution’.


We believe in meeting you, listening and understanding your needs first. If you are considering outsourcing for the first time or you wish to review your current outsourcing strategies, we would welcome the opportunity for discussion





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